Fidelity National Financial, Inc. · NYSE:FNF
Fidelity National Financial — Investor Presentation (February 2004)
29 slides from Fidelity National Financial's investor presentation, February 2004
Slide 1: Investor Update February 2004
Investor Update February 2004 0
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS • This presentation contains statements related to future events and expectations and, as such, constitutes forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, p
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS • Continued dominance in the title insurance market • Increased diversification - outsourced transaction processing for financial institutions and the real estate industry • A more balanced financial profile • 50% of revenue and earnings coming from processing and other outsour
Slide 4: Overview
OVERVIEW • A diversified provider of products, services and solutions to financial institutions and the real estate industry – Nation’s largest title insurance and escrow services company Alamo Title Chicago Title Fidelity National Title Security Union Ticor Title 3
Slide 5: Overview
OVERVIEW – One of the nation’s largest financial outsourcing providers • Nation’s largest mortgage loan processor • Bank processing – Large and mid-sized core bank processing – Community bank/thrift core bank processing – International core bank processing – Commercial loan processing – Proven provi
Slide 6: Strategy
STRATEGY • Operational – Leverage our market leadership, customer relationships and processing expertise in the title and escrow industry to significantly broaden both the outsourcing and processing opportunities with financial institutions and the real estate industry • Financial – Grow the non-tit
Slide 7: Growth Timeline & Milestones
GROWTH TIMELINE & MILESTONES $ In millions $8,000 $7.7 billion HQ move to JAX $7,000 AIS ACQUISITION (April 2003) $6,000 Formation of FNIS $5.1 billion $5,000 Alamo Title $4,000 Acquisition $3.9 billion CHICAGO FNF acquires Meridian TITLE Title and Security Title ACQUISITION $3,000 and Guarantee $2.
Slide 8: Keys to Success
KEYS TO SUCCESS • Bias for Action • Corporate headquarters move to Jacksonville • Eliminated more than 4,300 positions, or more than 20% of the title and escrow workforce from August 2003 through January 2004 • Autonomy and Entrepreneurship • Reward performance and results through compensation • Clo
Slide 9: Products and Services
PRODUCTS AND SERVICES Financial Institution Real Estate Title & Escrow Processing & Outsourcing Information Services 2003 Revenue: $6.0 B 2003 Revenue: $853 mm 2003 Revenue: $560 mm 75% of Q4 2003 14% of Q4 2003 7% of Q4 2003 Revenue Revenue Revenue Specialty Insurance Investments & Other 2003 Reven
Slide 10: Title Insurance - Core Business
TITLE INSURANCE - CORE BUSINESS • Title insurance allows for the efficient transfer of title in a real estate transaction; it protects the interest of both the buyer and the lender • “Reverse insurance” – Protects insured for an undiscovered event that occurred in the past • FNF also performs all th
Slide 11: Title Insurance – Core Business
FNF Title Insurance core Business TITLE INSURANCE – CORE BUSINESS Fidelity National Others Financial 12.3% 29.3% CA – 35% mkt. share TX – 34% Old Republic FL – 28%* 6.1% NY – 37% Stewart 11.7% First American 22.5% LandAmerica 18.1% FNF is #1 in the 4 states that Source: CDS Performance of Title Insu
Slide 12: Financial Institution Processing & Outsourcing
FINANCIAL INSTITUTION PROCESSING & OUTSOURCING • Primarily long-term, contractual revenue • Annualized revenue base of approximately $1.3 billion • 14% of 4th Quarter 2003 revenue • Components provide an end-to-end mortgage processing solution: • Empower! Loan Origination System (origination - $25 m
Slide 13: Overview – Fidelity Information Services
OVERVIEW – FIDELITY INFORMATION SERVICES • Core mortgage and financial institution processing and outsourcing services • Long-term, contractual, recurring revenue and earnings streams • $1.2 billion annualized revenue base • Goal is to grow FIS to a $2 billion revenue base over the next three years
Slide 14: Overview - Fidelity Information Services
OVERVIEW - FIDELITY INFORMATION SERVICES FIS Revenue Breakdown - $237 mm - 4th Quarter 2003 Mortgage Loan Processing 30% ($71 mm) Auto Loan Bank Processing Processing 63% $16 mm 7% ($150 mm) • 6.5% sequential organic growth in 4th quarter of 2003 and 9% total sequential growth in 4th quarter 2003 13
Slide 15: Fidelity Information Services
FIDELITY INFORMATION SERVICES • Mortgage Processing – Mortgage loan processing for 46% of all the mortgage loans in the U.S. – 8 of the top 9 mortgage loan originators that outsource as customers – Renewals with Wells Fargo and Bank of America in 2003; won back Washington Mutual – $71 million in 4th
Slide 16: Fidelity Information Services
FIDELITY INFORMATION SERVICES • Bank Processing – Core bank processing, channel delivery and information analysis for larger domestic and international financial institutions – Integrated processing suite for community/smaller banks – Commercial loan processing, bank syndication and risk management
Slide 17: Fidelity Information Services
FIDELITY INFORMATION SERVICES • Bank Processing – Broadens and deepens FNF’s overall relationship with financial institutions, providing potential revenue synergy – Competition: • Larger domestic banks – CSC, AMS, AFS • Larger international banks – Alnova, SAP, Sanchez • Smaller banks – Fiserv, Jack
Slide 18: Fidelity Information Services
FIDELITY INFORMATION SERVICES • Auto Loan Processing – Auto finance loan processing – $17 million in 4th Quarter 2003 revenue – Leverages existing data center capacity – Renewed two largest clients (Ford and Honda) in 2003, with total contract revenue of $17 million – Competition – LeMans, Fiserv, M
Slide 19: Sample FIS Customers
SAMPLE FIS CUSTOMERS Pemier Banking 18
Slide 20: FNF Customer Wins Influenced by FIS
FNF CUSTOMER WINS INFLUENCED BY FIS Customer Revenue Source WAMU Default, additional title and escrow Bank of America Default, additional title and escrow, appraisal, tax, opportunity in flood and credit ABN Amro Default, valuations Household Default First Tennessee (First Horizon) Default Irwin Mor
Slide 21: Real Estate Information Services
REAL ESTATE INFORMATION SERVICES • $560 mm revenue base in 2003 • 7% of 4th Quarter 2003 revenue • Components: – Mortgage data products – Relocation services – 1031 Exchange services – Property records – Mortgage aggregation – Multiple Listing Services (MLS) – RealEC (electronic vendor management) 2
Slide 22: Real Estate Information Services 2003 Revenue Breakdown
REAL ESTATE INFORMATION SERVICES 2003 Revenue Breakdown Other $23 mm Most correlated (4%) with mortgage Mortgage data products originations RealEC $387 mm (69%) $5 mm (1%) Mortgage Aggregation Relocation MLS $21 mm Services $39 mm (4%) $33 mm (7%) Property Records (6%) $23 mm (4%) 1031 Exchange Recu
Slide 23: Specialty Finance
SPECIALTY FINANCE • $135 mm revenue base in 2003 • 2% of 4th Quarter 2003 revenue • Components: – Flood Insurance (48% of revenue) » Transaction processing – Federal Government underwrites through NFIP – Home Warranty (32% of revenue) – Homeowners Insurance (20% or revenue) 22
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS Q4 2003 2003 Revenue $2.0 billion $7.7 billion Net Earnings $196 million $862 million Cash Flow from Operations $297 million $1.3 billion Dec 31, 2002 Dec 31, 2003 Investment Portfolio $3.0 billion $3.2 billion Reserve for Claim Losses $888 million $940 million Stockholders' Equ
Slide 25: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue Net Earnings 9000 1000 8000 900 % 43 800 % 7000 = 52 R 700 = G 6000 CA 600 A GR 5000 03 C 0 3 2 500 00 4000 8– 2 9 400 8– 19 9 3000 300 19 2000 200 1000 100 0 0 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 Cash Flow from Operations $1,400 $1,281 $1,200 % 7
Slide 26: Return on Equity and Book Value
RETURN ON EQUITY AND BOOK VALUE 12% to 15% Trough Return on Equity 40.3% 40.0% $30.00 $25.85 31.5% No benefit from FIS type $25.00 30.0% 25.9% 27.1% recurring revenue 27.3% 28.1% and earnings stream 22.2% $20.00 20.0% 17.1% $15.00 14.1% 10.3% 10.0% $10.00 10.0% $5.00 0.0% $0.00 1993 1994 1995 1996 1
Slide 27: Objective: A Balanced Financial Profile
CONCLUSION OBJECTIVE A BALANCED FINANCIAL PROFILE 26
Slide 28: Diversification Progress
DIVERSIFICATION PROGRESS 2000 4th Quarter 2003 Specialty Insurance 77% $52 million 2% Title & Escrow Title & Escrow $2.4 Billion $1. 5 Billion Real Estate Info $137 million 7% FIPO $290 million Real Estate Information 14% $167 mm $1.9 billion in annualized non-title revenue vs. $167 million in 2000
Slide 29: Future Potential
FUTURE POTENTIAL 50% of Revenue from Processing & Other Outsourced Services Title and Escrow 50% Specialty Insurance 5% Financial Real Estate Institution Information Processing 15% 30% 28 A Balanced Financial Profile
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